How to Improve Your Credit Score and History

Many small businesses and individuals who require small to medium size loans are now using online money lender for their financial needs. Referred to alternative lenders, their popularity in providing small to medium scale financial help is getting higher. Online lenders are considered today as the wave of the future lending because of their swift and immediate approval of financial assistance to small businesses and individuals. But like any other lending institutions, online lenders have their own advantages and disadvantages when it comes to lending out money.

Benefits of Online Loans

Admittedly, BORROWING online can save an individual a lot of time. All you have to do is surf the internet for loan websites and immediately get a comparative offer of various lenders. If you finally opt for one, all you need is to apply, send the necessary requirement via e-mail and just wait for the response which usually only takes a day. Aside from the very short processing loan period, online lenders are open 24 hours a day 7 days a week so you can apply any time you want. Applying with several traditional lenders will oblige you to submit a credit background of yourself which can be detrimental to your credit ratings. With online lenders, you only need to submit one and that is with the one that you have chosen. Lastly, unlike banks, online lenders are not particular with the individuals and businesses that apply with them.

Disadvantages of Online Loans

Online lenders one disadvantage is their interest rates. They are quite high when it comes to the interest that they charge. There is also a chance that online lender might just suddenly go out of business and if this happen might create some problems with their borrowers. As earlier advised, there is a need for the borrower to make sure that you opt to go with a highly established and solid online lender and you can do this by making a thorough study of the reviews and if possible interview the various clients that have done business with the said online financial company.

Before the internet, BORROWING money can be physically difficult because you would to visit each and every financial institution that you would want to apply a personal loan with. This is still being done but there is now online MONEY LENDER which you can apply to today. If you need any type of loan all you do is surf the internet and review the loan packages being offered by online lenders. Because online loans are readily available, the problems and hassles of personally applying for a loan are eliminated and there are more than enough sites on the net to cater to the numerous loan applicants today. Online borrowing is getting popular that today, loans being released through online borrowing could reach Billions of dollars.

Perfect for Emergencies and Convenient

People may ask whether borrowing online is safer than borrowing from traditional Money lenders. I suppose the right question is why do many people now placed their trust in online loans? There seem to be two major reasons for these phenomena. First, online loans are perfect for emergencies and are very convenient. Imagine yourself suddenly facing an expense dilemma that needs to be covered at the soonest possible time. This means that you need to get your loan in Singapore approved quickly. With very little documentation to submit, online loans are quick in releasing loans. This is also the reason why they are quite convenient. You just need to be very careful and really make a full study of the online lenders you’ve chosen to avoid being scammed. You can do this by checking the reviews of their previous clients.

Accessibility and Low Rates

Banks today have become more cautious when lending out money. Online lenders are more flexible and can get your loans approved faster. Some online lenders are even lenient to applicants whose credit score and history is not that impressive. Unlike payday lenders, online loan industry is strictly regulated by the federal government. This includes limiting the amount of interest and loan fee that they charge. They are also obliged to provide necessary information relative to the loan applicant so the borrower exactly knows the cost of the loan and the interest and fees that they charge on it.

BORROWING money today is more of a necessity than anything else. Because of the high cost of living, there is always the possibility that you will face some kind of financial problem that will leave you no other recourse but to go to a MONEY LENDER. However, applying for a loan is something that you should first study very carefully. Here are some tips that you might find helpful when borrowing money.

Borrow only what you need

Always remember to borrow as little as possible or borrow only an amount that suffices your expense need. Never be tempted to borrow more than you need or the repayments may put you in more hot waters.

Carefully select the financial institution

Make sure that the finance institution you are going to apply a cash loan is legit and fully registered. Choose several of these and compare their loan packages to be sure that you will be getting the best deal.

Borrow only to cover specific and necessary expenses

Borrowing to cover educational expenses, home repair and medical procedures are all valid reasons to be in debt. However, never borrow money to pay off luxury items, bills, expensive holiday trips, and more importantly other debts. By doing this, you will only be putting yourself in more financial trouble.

Plan Ahead on How to Pay Back the Loan

If you really need to borrow, plan ahead on how to pay for the loan. Organize and study carefully your income and expense situation so you can determine where to cut some of your expenses to pay off the loan. Also consider the interest and other loan fees prior to making a final decision on the loan.

Get Loan Insurance

This may be an extra expense when you apply for a loan but getting loan insurance is more of an investment than an expense. If you are borrowing a sizable amount, it would be best to get loan insurance because in the event of a default, there is something for you to depend on. However, make sure to read the fine print of the insurance prior to getting one.

Managing your debt is an integral part of an individual’s personal finance. Ideally, having no debt would be the best thing that can happen to you. But we don’t live in an ideal society and like most families we incur debt. For instance, it would be foolish to buy a car in cash or a real estate property without mortgaging it. We set aside money for education but we still end up BORROWING money just to cover the deficit of our educational expense. Incurring debt is sometimes necessary and at times desirable especially for things like education. The catch here is to know how to borrow money with a low interest rate for a high end investment.

Debt Means Using Other People’s Money

Incurring debt simply means that you are purchasing things using other people’s money. A classic example of this is the use of a CREDIT card where you purchase things and pay for it at a more convenient time. Taking out a PERSONAL LOAN has the same principle. In return for using money from a MONEY LENDER, the latter is entitled to be paid with interest.

No Such Thing as 0% Rate

When people loan you money, you can be sure it’s never interest free. It just seems that way especially if you use a credit card to purchase the said items. They usually say the cost of the item is interest free but the interest itself is already included in the price.

Debt is never bad; you only need to understand it

Personal debt comes in various forms. There is the Property mortgage, a long term loan that may take 10 to 25 years to finish; home equity loan and car loan considered as intermediate-term loan which last about 5 years and there is the short term like those incurred by credit card or personal loans taken from any financial institution. Remember that the longer the term of the loan is, the lower its interest rate is; but in the same scenario you will be paying more for a long term loan especially if the interest on the amount is compounded monthly.

When you apply for a loan, MONEY LENDERS will initially analyze your CREDIT score and history. This is because credit score will show your credit pattern with focusing on more recent credit transactions that you’ve made. There are actually several factors that affect your credit score and history and these are first, your diligence in paying your credit liabilities on time because delinquent payments can have a negative impact on your credit standing. Second, keeping low balances on credit card, revolving credits and other PERSONAL LOANS; Third, Not applying for new credit accounts and fourth paying off your debt instead of moving it around will raise the standing of your credit score.

Payment History

Reliability on paying your credit liability on time is an important factor in raising your credit score because paying your credit liabilities diligently shows that you are responsible in keeping your debt responsibilities at a very high standard. For money lenders, this is a good gauge to see whether you can be trusted to pay back on time the amount of money they’re going to lend you.

You’re Credit Utilization Ratio

Your Credit utilization ratio is another factor that any financial institution would look at. The ratio would normally be based on your credit card usage and this is done by dividing the total balance of your credit card against your total available credit limit. Lenders would like to see at least 30% or less result. If the result is way below the 30% limit then you can be considered as one with a very good credit standing which would be a plus for your loan application. Low credit utilization also shows that you are using your credit way below the maximum limit which is good because the less you use your credit card, the better. Two other factors that can also help lift up your credit standing are paying off your current debt to zero out or at least lower your credit card liabilities and second, is to become an authorized user of another individual’s credit account (as long the principal user also uses his credit card with diligence and responsibly).